How Unemployment Protection and Collective Bargaining Relate to Lower-Tail Wage Inequality: Panel Evidence from OECD Countries

DOI

10.2991/978-94-6239-787-3_57How to use a DOI?

Keywords

unemployment protection; collective bargaining; lower-tail wage inequality; D5/D1 earnings rati; labor maket institution; wage compression; OECD panel data

Abstract

This paper examines how unemployment protection and collective bargaining coverage are associated with lower-tail wage inequality across OECD countries. Lower-tail wage inequality is measured by the D5/D1 earnings ratio, which compares median earnings with earnings at the 10th percentile of the earnings distribution. Using an unbalanced panel dataset from 2010 to 2019, the paper estimates pooled OLS and two-way fixed effects models. Unemployment protection is measured by the net replacement rate during unemployment, while labour relations are measured by collective bargaining coverage. The results show that more generous unemployment protection is significantly associated with lower D5/D1 earnings ratios in the two-way fixed effects model. Collective bargaining coverage is also negatively associated with lower-tail wage inequality, although the evidence is weaker. However, the interaction between unemployment protection and collective bargaining coverage is not statistically significant, suggesting limited evidence that the two institutions reinforce each other. Overall, the findings provide stronger support for the separate roles of unemployment protection and collective bargaining than for their complementarity.

Copyright

© 2026 The Author(s)

Open Access

Open Access This chapter is licensed under the terms of the Creative Commons Attribution-NonCommercial 4.0 International License (http://creativecommons.org/licenses/by-nc/4.0/), which permits any noncommercial use, sharing, adaptation, distribution and reproduction in any medium or format, as long as you give appropriate credit to the original author(s) and the source, provide a link to the Creative Commons license and indicate if changes were made.

Download article (PDF)

TY  - CONF
AU  - Yutong Wu
PY  - 2026
DA  - 2026/09/29
TI  - How Unemployment Protection and Collective Bargaining Relate to Lower-Tail Wage Inequality: Panel Evidence from OECD Countries
BT  - Proceedings of the 2026 4th International Conference on Management Innovation and Economy Development (MIED 2026)
PB  - Atlantis Press
SP  - 574
EP  - 580
SN  - 2352-5428
UR  - https://doi.org/10.2991/978-94-6239-787-3_57
DO  - 10.2991/978-94-6239-787-3_57
ID  - Wu2026
ER  -